Poor buying interest for the Far East Russian crude grade, ESPO Blend, is continuing to exert pressure on its premiums, which dropped to a fresh one-year low on Monday, S&P Global Platts data showed.

Premiums for M1 September-loading ESPO crude was assessed at $1.95/b to Platts front-month Dubai assessments on Monday, down 5 cents/b from last Friday. The premium was assessed at the same level last on August 4, 2017, Platts data showed.

Russia's exports of the medium sweet ESPO Blend crude in September are expected to total 2.4 million mt, comprising 24 cargoes of 100,000 mt each, according to the monthly program seen by Platts.

September-loading ESPO Blend cargoes were sold at premiums of around $2-$2.30/b to Platts Dubai assessments, down from premiums of $2.50-$2.70/b to Platts Dubai for August, mainly due to lackluster demand from China and a weakening Dubai structure, market sources said.

"Since May, we have been seeing Chinese demand slowing down," a Singapore-based crude trader said. "As a result, the premiums for the ESPO grade have been declining."

In June, crude oil imports by China fell to a 20-month low of 5.78 million mt in June, or 1.41 million b/d, according to a monthly survey by Platts.

In July, however, crude imports rebounded by 27.3% from June to around 7.36 million mt or 1.74 million b/d. The rebound was broadly within market participants' expectations, as imports in June were affected by restrictions on port operations because of the Shanghai Summit.

However, despite the rebound in imports, the buying appetite for ESPO was still lackluster and this, combined with a weak Dubai market structure, pressured premiums even lower.

Trading sentiment for the Dubai crude market weakened from July mainly due to ample supply of cargoes in the region, market sources said.

The M1 September cash Dubai in July averaged $73.12/b, down 47 cents/b from June. The weakness continues with the M1 cash Dubai averaging $71.91/b so far in August.

Some unsold ESPO cargoes from the September loading program were still heard to be looking for homes, and were being offered at premiums of less than $2/b, sources said.

"There is some unsold ESPO in the market for September, which is expected to fetch premiums of around $1.8-$2/b," a second Singapore-based trading source said.

Market participants are expecting October-loading ESPO cargoes to start trading this week at premiums of around $1.8-$2.2/b to Platts Dubai.

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